An U. S. MNC translates the balance sheet and income statement of a French subsidiary, which keeps its books in euro, into U. S. dollars using the money/non-monetary method. The reporting currency is US dollar. The subsidiary is at the end of its first year of operation. The historical exchange rate is $1.60/€1.00 and the most recent exchange rate is $1.80/€ What is the value of inventory in $? Balance Sheet Cash € 2,500 Inventory (current Value = €1,800) € 1,500 Net fixed assets € 4,200 Total Assets € 8,200 Current liabilities € 1,200 Long-term Debts € 2,200 Common stock € 2,700 Retained earnings € 2,100 CTA Total L&E € 8,200 Income Statement Sales Revenue € 12,000 COGS € 7,500 Depreciation € 1,000 NOI € 3,500 Tax(40%) € 1,400 Profit after tax € 2,100 Foreign Exchange gain (loss) Net income € 2,100 Dividends 0 Addition to Retained Earnings € 2,100 Multiple Choice $2,400 $1,506 $2,750 None of the above $2,078

Example1 lcnrv: ted company uses the lower of cost or nrv method in valuing its inventory items. the inventory at december 31, 2017, consists of products a, b and c, each having 1,000 units. relevant unit data for these products appear below: item a item b item c cost $ 80 $80 $80 estimated selling price 180 100 90 estimated selling cost 30 30 30 required: using the lower of cost or net realizable value rule, determine the proper value of inventory for balance sheet reporting purposes at december 31, 2017. prepare any necessary journal entry. apply the lower of cost or nrv method: • on an individual inventory basis; • on a group basis; • on a total inventory basis. solution worksheet: inventory (on an individual basis): inventory value item nrv cost lc- item a item b item c total inventory (on a group basis): inventory value item nrv cost lc- group 1 (item a and b) group 2 (item c) total inventory (on an aggregate inventory basis): inventory value item nrv cost lc- total inv